Articles

Leading Change with Global Mindset at Johnson & Johnson Brazil

David Bowen and Andrew Inkpen

By David Bowen, Ph.D., and Andrew Inkpen, Ph.D.

Johnson & Johnson Consumer Products thrived during decades of military rule and a closed economy. Brands such as Cotonete for cotton swabs, Sundown for sunscreen and Band-Aids for adhesive bandages dominated their product categories. But Johnson & Johnson market share started falling in the 1990s as the Brazilian government took steps to bring hyperinflation under control and open the economy to greater competition. “By the late 1990s we had a crisis,” one Johnson & Johnson executive told us in Brazil. “Our competitors were moving faster than us, making decisions faster than us, and innovating faster than us.”

Johnson & Johnson needed to regain its edge in Brazil and called on Jose Antonio Justino to lead the effort in 2000. The new managing director was a Brazilian who understood his native culture. But he also brought international experience to the job and a set of global attributes that researchers at Thunderbird School of Global Management have defined as “global mindset.”

Leaders with a global mindset have the skills and aptitudes necessary to influence people across cultures and succeed in complex global environments. The ongoing Global Mindset Project, led by Thunderbird Dean of Research Mansour Javidan, Ph.D., has produced a scientific self-assessment called the Global Mindset Inventory that measures the same attributes we recognized in Justino when we met him in São Paulo. Justino’s global mindset helped him assess the situation in Brazil and lead change in a complex environment. By 2005 costs had come down at Johnson & Johnson Consumer Products Brazil while sales, profits and employee satisfaction all had come up.

“The way we created change was to give people the space to express their opinions,” Justino told us. “We had to remove barriers. We shared with them the strategy and how we were going to implement the strategy. We had to convince people that the changes were a company plan, not just my plan.”

Waiting for orders

As the Brazilian market opened in the 1990s, foreign competitors began arriving with state-of-the-art technology and manufacturing equipment. Local companies also ventured into markets that previously had an array of entry barriers. In the disposable diaper industry, for example, Johnson & Johnson had three competitors before the opening of the economy and more than 50 a few years later. The company’s Brazilian market share in diapers dropped from 70 percent in 1990 to about 12 percent by the end of the decade.

Johnson & Johnson Consumer Products Brazil quickly found that its way of doing business was compromising its competitiveness. Part of this business culture involved a top down management structure that suppressed innovation and discouraged risk taking. “Everybody was scared of top management,” said one manager who joined the company in 1995. “They had to approve every sales promotion, every advertisement, every new product.”

Central command even made decisions about the color of new labels. “There was a lack of empowerment and no trust,” the manager told us. “People would say, ‘I wash my hands — it is not my job to decide.’” The result for Johnson & Johnson was a reduction in Brazilian staff that impacted about 1,000 people. New product development stalled, employee morale dipped and market share slid.

“We had a culture of waiting for orders,” said an executive who helped Justino revive Johnson & Johnson Consumer Products Brazil. “The top-down model of management, which is very Brazilian, had to be changed. Most of our major competitors were multinational companies, and they were operating more aggressively and taking more risks.”

Agent of change

Thunderbird research shows that global leaders such as Justino who influence individuals and organizations from different cultural backgrounds possess three types of capital. We call these intellectual, psychological and social. Intellectual capital refers to a person’s understanding of culture, history, geography and political and economic systems in different parts of the world.

Justino developed a high level of intellectual capital during a long career at Johnson & Johnson that started in 1976. He came to the company as a product manager assistant and was promoted a year later to product manager for several brands. In 1980 he was assigned to the United States in a position designed to help high-potential international managers understand the Johnson & Johnson corporate culture and global operations.

When Justino returned to Brazil in 1982, he was promoted to group product manager responsible for sanitary protection, Perfex, Shower-to-Shower deodorant and health care products. In 1993 he became president of Johnson & Johnson de Colombia, where he spent the next seven years before returning again to Brazil.

Psychological capital, the second component of a global mindset, refers to a person’s passion for diversity, quest for adventure and self-assurance. People with these traits are risk takers, something Justino displayed while adopting a new way of doing things within the established hierarchical culture of Johnson & Johnson Consumer Products Brazil. During this change process, he also displayed a high level of confidence in his vision for the organization

Socail capital, the final component of a global mindset, refers to a person’s intercultural empathy, interpersonal impact and diplomacy. People we met in Brazil frequently described Justino as a leader with these traits. “He is very charismatic and has the ability to connect with people at all levels,” one manager told us at Johnson & Johnson Consumer Products Brazil. “He came to the plant and could talk to anyone.”

In all of these ways, Justino’s career path and experiences provided important opportunities for him to develop a global mindset that prepared him for the challenges in Brazil.

Leading change

Even with this preparation, Justino knew he could not lead the change effort on his own in Brazil. So he turned to his management executive board for support. The coalition’s first step was to help people realize the status quo was no longer acceptable. Justino and the board soon began to grapple with how to push the sense of urgency downward and get others engaged in the change process.

Justino started with a series of town hall meetings for every Johnson & Johnson employee in Brazil. He also hired an outside consultant to facilitate a weeklong offsite workshop for the top 70 Brazilian leaders. One principle that Justino emphasized everywhere he went was the need to bring people to the center of decisions at Johnson & Johnson. “We want people to be empowered to run their businesses and then be accountable for their decisions,” Justino said. “Some people could not change and had to be replaced.”

Getting results

Justino and the board put in place revised structures and systems, particularly in human resources, to reinforce and sustain the cultural changes. The new mission of human resources was to “create an environment where people may develop fully to their full potential.” As financial performance improved, new emphasis was placed on coaching and leadership development to embed the new way of doing things in the more decentralized, innovative, forward-thinking organizational culture that emerged.

Succession planning became more important. New people were hired from outside Brazil, something rarely done in the past. Poor performing products also were eliminated from the portfolio, another thing rarely done in the past. The changes resulted in significantly improved financial results. In 2000 sales in Brazil decreased 20 percent and profits dropped 67 percent compared to 1999. After performance stabilized in 2002, the organization achieved an annual growth rate of 10 percent in sales and 14 percent in profits during the next three years.

Employment also increased to more than 2,500 positions in 2005, up from 2,400 in 2000. Leading change is the ultimate test of a leader, and globalization has made that test even more difficult. Executives in global environments must manage the cross-cultural complexities that come with a mix of employees, customers, suppliers and competitors.

Justino was up for the challenge in Brazil. Our research at Thunderbird suggests one key reason was the global mindset he brought to the job.

David E. Bowen, Ph.D., is the G. Robert & Katherine Herberger Chair in Global Management at Thunderbird School of Global Management in Glendale, Arizona. Andrew Inkpen, Ph.D., is a Thunderbird professor of management and the J. Kenneth and Jeanette Seward Chair in Global Strategy.